Will Quantitative Easing Soothe the Capital Markets?

Someone recently asked how I feel about QE2 wrapping up at the end of June. This has been a big deal for a while, and I’d like to pose the question to you too. But first some contemporary context.

People are still talking about Chairman of the Board of Governors of the Federal Reserve System Ben Bernanke’s historic and notable speech last week. Historic because it’s the first time in more than a century that a Fed chairman has given a press conference in that capacity.

And notable because Bernanke announced the end of Quantitative Easing 2, the second round of the U.S. Federal Reserve printing new money to purchase federal debt. Pundits were almost unanimously critical of Bernanke last week, and I was surprised to find that the beat goes on this week.

The Fed Chairman spoke on Wednesday. The Wall Street Journal on Thursday said Bernanke’s speech didn’t tell us anything we didn’t already know, and The New York Times wrote that he’s not concerned with unemployment.

By Monday, Forbes told us that Bernanke’s speech will undermine the U.S. Dollar. And politically unambiguous BigGoverment.com blamed the Bush nominee for almost all that’s gone wrong on planet Earth since taking office in 2006.

Perhaps the end of QE2 will bring an end my (irrational?) visions of pre-Depression Era workers pushing around wheelbarrows full of newly minted cash to buy bread. I’m not sure what the plastic equivalent would be for that nine decades later.

So what will be the effect on capital markets this summer?

I hope to see yield on debt rise. How about you?